It’s Time To Buy Dirty Coal…

A glittering resume helps a lot in getting a job, but a majority of the winners I have known have undistinguished pedigrees; brains, guts, drive, and intuition put the points on the board. Performance investing is a numbers game. ~ Barton Biggs, “A Hedge Fund Tale of Reach and Grasp” 

Good morning! 

In this week’s Dirty Dozen [CHART PACK]  we look at a leaky ARK, an obvious short, a major inventory shortage, BDI making decade highs, coal on a tear, and a few inverted H&S bottoms, plus more… 

 Let’s dive in. 


***click charts to enlarge*** 


  1. The retail mob giveth and the retail mob taketh away… After ending 2020 with incredible inflows, the ARK family of ETFs has seen an equally stunning stampede for the exit this year. 


  1. The reversal in sentiment is puzzling when looking at some of ARK’s larger fund holdings… darlings like PLTR, which you can own for only 34x sales. That multiple might seem a tad rich, but we must consider that the company is expected to grow those sales 34% this year and see declining sales growth going forward. So that’s something, right?                                                     

I kid, we’re short.

  1. DB making the case for higher yields going into the end of the year. We’re also bearish long bonds looking out over the next month +.



  1. As you know, we became big gold/silver bulls back in March. We think the market is gearing up for its next major run higher. With that said, important bases often take time to form and gold is up against the upper range of its 10-month bull flag. If yields pop here, we could see gold chop sideways/lower here for a bit. 



  1. Inventories are at extremely low levels, especially considering the rebound in global growth. DB writes “The risk here is clear. As inventory levels have fallen to multi-decade lows at retailers, there are likely many businesses that will not have enough inventory to satisfy customers as economies recover and pent-up demand is unleashed. This is particularly the case as retailers are far more reliant on just-in-time supply chains than they were in decades past.”


  1. Just-in-time might quickly turn into out-of-stock… 



  1. The Baltic Dry Index just hit 11-year highs with no sign of slowing.



  1. Many dry bulk shippers have been on a complete tear this year. And now many tanker names are setting up as well. STNG has completed year + inverted H&S bottom. The measured move target is above $30 a share. 



  1. I’m of the mind that when this Buy Climax ends in the next few weeks/months, we’ll see expensive US stocks chop sideways in an extended range, while cheaper unloved sectors such as staples and utilities start showing relative strength.



  1. Chinese thermal coal futures are trading at decade highs, as plants increasingly switch to the dirty energy source following higher nat gas prices. 



  1. Coal prices are now highly competitive in the US, as the below chart shows (h/t @contrarian8888).



  1. My buddy Chase over at Pinecone Macro as well as the great Twitter follow @contrarian8888, have been all over this trade. US coal producers are probably the most contrarian trade out there right now. And this contra trade is being confirmed by an incredibly bullish tape. BTU just completed a 15-month inverted H&S bottom. 



Stay safe out there and keep your head on a swivel.

Your Macro Operator, 


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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.


Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

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